PEOPLE'S AWARENESS AND HILLY AREA DEVELOPMENT (PAHAD),KANDHAMALA vs. DCIT, BERHAMPUR CIRCLE, BERHAMPUR

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ITA 470/CTK/2015Status: DisposedITAT Cuttack22 March 2017AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal allowed the assessee to produce the grant letters before the Assessing Officer for fresh adjudication. The addition was made because the assessee failed to prove the restricted conditions of the grant.

What were the facts?

The assessee, an NGO, had an addition of Rs. 9,16,535/- confirmed by the CIT(A) on account of unspent grant. The CIT(A) held that the assessee failed to provide evidence of restricted conditions for the grant and did not file Form No. 10.

What were the issues?

Whether the unspent grant amount is to be treated as income when the assessee fails to provide evidence of restricted conditions and file mandatory forms. Whether the assessee should be given an opportunity to produce new evidence.

Which sections of the Income-tax Act were involved?

Section 11(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK

Before: SHRI N.S SAINI

For Appellant: Shri Niranjan Mishra, AR
For Respondent: Shri D.K.Pradhan, DR
Pronounced: 22/03

This is an appeal filed by the assessee against the order of CIT(A)-3,

Bhubaneswar, dated 9.8.2015 for the assessment year 2010-2011.

2.

The sole issue involved in this appeal is that the ld CIT(A) erred in

confirming the addition of Rs.9,16,535/- made by the Assessing Officer.

3.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. The brief facts of the case

are that the Assessing Officer found that the assessee has shown total

2 ITA No. 470 /CT K/ 2015 Asse ssment Year : 20 10- 201 1 receipts of Rs.15,76,980/- in the income and expenditure account. The

assessee has debited expenses under different heads for Rs.14,76,267 and

has shown excess income over expenditure of Rs.1,00,713/-. The

Assessing Officer, due to non-compliance of the assessee with the notices,

allowed deduction only for administrative expenses and disallowed balance

expenditure of Rs.14,59,460/- and assessed the assessee to tax on the said

amount as an AOP.

4.

On appeal, it was submitted that the grant-in-aid as per the income

& expenditure account is Rs.12,26,515/- and as per receipts & payment

account is Rs.20,46,200/-. The difference amount of Rs.9,16,535/- was

unspent grant for utilization in subsequent year and this being a temporary

restricted fund, was not income of the assessee. The CIT(A) observed that

the assessee did not file Form No.10 as required under Rule 17 read with

Section 11(2) alongwith return of income. The appellant has not filed it

even in the course of remand proceedings. Filing of Form No.10 before the

Assessing Officer is mandatory and without particulars of income to be

excluded and set apart for accumulation, the Assessing Officer cannot

entertain the claim of the assessee u/s.11 of the Act. The CIT(A) further

observed that the unspent grants relates to grant received from the

projects CARE, WFP, ACA, AHVY. Restricted grants received is not a

voluntary contribution if grant comes as legal obligation backed by a legally

enforceable contract. In the assessee’s case, the assessee failed to produce

the legal obligations thereon backed by legally enforceable contract in any

3 ITA No. 470 /CT K/ 2015 Asse ssment Year : 20 10- 201 1 proceedings under the Act and in absence of legal obligations attached with

such specific grants/contribution, the CIT(A) held that the restricted grant

amounting to Rs.9,16,535/- is voluntary contribution subject to provisions

of utilization and application as per provisions of law and confirmed the

addition of Rs.9,16,535/-.

5.

Before me, ld Authorised Representative of the assessee argued and

submitted that the addition of Rs.9,16,535/- was confirmed by the CIT(A)

on the ground that the restricted conditions on the grant of Rs.9,16,535/-

was not proved by filing evidence before him. He filed an affidavit

contending that that two letters of Ministry of Textiles, Government of

India both dated 21.8.2009 for Rs.5,43,000/- and Rs.4,50,000/- totaling to

Rs.9,93,000/- were not available to be produced at the time of assessment

proceedings and also proceedings before the CIT(A). Hence, he prayed

that matter may be restored to the file of the Assessing Officer for fresh

adjudication after considering these evidences.

6.

Ld Departmental Representative had no objection for the same.

7.

In view of the above facts and circumstances of the case, I am of the

considered view that the addition was made by the Assessing Officer and

confirmed by the CIT(A) as the assessee failed to produce the grant letters

received from the Ministry of Textiles, Government of India before them for

the restricted conditions. Ld Authorised Representative of the assessee has

now filed before me copies of the said grant letters both dated 21.8.2009.

In my considered view, no harm will be caused if one more opportunity is

4 ITA No. 470 /CT K/ 2015 Asse ssment Year : 20 10- 201 1 allowed to the assessee to produce both the grant letters issued by Ministry

of Textiles, Government of India for fresh adjudication by the Assessing

Officer. I, therefore, set aside the orders of lower authorities and restore

the matter back to the file of the Assessing Officer for fresh adjudication

after considering the grant letters furnished by the assessee as per law.

8.

In the result, the appeal filed by the assessee is allowed for statistical

purposes.

Order pronounced in the open court on 22/03/2017 in the presence of parties.

Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 22/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : People’s Awareness and Hilly Area Development (PAHAD, Sudrukumpa, Phulbani, Kandhamal. 2. The Respondent. DCIT, Berhampur Circle, Berhampur/Income Tax officer (Exemption) Berhampur-. 3. The CIT(A) 3, Bhubaneswar 4. Pr.CIT-3, Bhubaneswar. BY ORDER, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack

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